GBP/JPY continues to trade sideways around 202.00 in early European trading on Monday, maintaining a choppy tone as investors weigh UK fiscal concerns against political developments in Japan. The pair remains within a downward correction channel, extending the decline from its October high near 206.30, while larger daily wicks highlight indecision in the market.
The British Pound (GBP) remains under pressure as doubts grow over the UK government’s fiscal outlook, limiting upside potential despite recent weakness in the Japanese Yen (JPY). The Yen came under pressure earlier in the session after reports confirmed that Sanae Takaichi, seen as a fiscal dove, has secured the necessary backing to become Japan’s next Prime Minister. However, the Pound’s inability to capitalize on this Yen softness suggests sentiment toward the UK currency remains fragile.
Technical outlook: GBP/JPY capped at 203.00, support eyed at 202.00
Technically, GBP/JPY is struggling to gain traction after being capped near 203.00, with immediate support forming around the 202.00 mark. The 4-hour chart highlights a hesitant market tone, with the Relative Strength Index (RSI) fluctuating around the 50 level, reflecting a lack of clear directional bias.
The pair continues to form a pattern of lower highs and lower lows, reinforcing a bearish bias in the short term. A sustained move below 202.00 could expose the channel bottom near 200.90–200.95, which serves as the next key support area.
On the other hand, buyers would need to clear the channel resistance near 203.10 and the October 14 high around 203.50 to negate the bearish pattern. A confirmed breakout above that zone could pave the way for further gains toward the 204.40–204.50 region (October 8 lows), with the year-to-date high near 205.30 back in focus if momentum strengthens.
